Obama: farm subsidies, protectionism and biofuels?

January 20 saw the inauguration of Barack Obama to the US presidency. How will the Obama administration manage the US agricultural system, from the lessening of support for agribusiness, to diversifying the federal crop programme and banning packers from owning livestock? Several industry experts and politicians share their opinion.

By Nicholas Zeman

President George W. Bush initially vetoed the 2008 US Farm Bill and Washington insiders say he was hostile to it at every turn. “It was a highly ideological and rigid approach to negotiating with Congress,” says Earl Pomeroy (Democrats), who is in the House of Representatives on behalf of the state of North Dakota. He was very involved in the process of authoring the monstrous $300 billion piece of legislation. “He walked away from the opportunity to be involved. It was irresponsible, ideological nonsense.” Bush’ approach was much more related to an ideology of imposing caps for public farm funding, meant to decentralise market share and curb government support of vertically integrated firms. Earlier in 2008, the Bush administration had announced a proposal to disqualify producers with a net income above $250,000 from receiving government subsidies.

The Farm Bill sent by Congress to the president’s office, however, contained benefits for farms with purses much heavier than the weight suggested by the administration. Unlike Bush, then president-elect Barack Obama supported the Farm Bill and voted for it, even though he agreed with the administration that farm incomes should be capped to benefit smaller players and new entrants. It was a compromise that Pomeroy says demonstrates

Obama’s understanding of the complex and subtle details involved with passing federal legislation. “I’m for payment limits too, but that issue has to be dealt with largely at the regional or state level,” Pomeroy says. “Because of the consolidated nature of farming and the many interests the Farm Bill considers, compromises had to be made for the purpose of consensus. Barack Obama supported the Farm Bill because he understands compromise.”

Obama and meatpackers

In terms of farm policy, Obama ran for president with campaign themes of decentralisation and diversification, saying specifically that he would “implement a $250,000 payment limitation so that we help family farmers – not large corporate agribusiness.” Daniel Sumner, director of the Agricultural Issues Center at the University of California-Davis, says this is just standard campaign rhetoric. “When it comes to votes on real legislation the details matter,” he says. “Obama is not committed one way or the other on that issue.” Pork producers do not receive direct payments from the government, but because most US hog farms also grow grain, the industry is affected by subsidies. Obama’s campaign promises, however, did not stop at income limits for subsidy eligibility. He openly criticised some of the practices in the livestock industry, vocally supported the development of small business and regional food systems, and spoke against the interests of corporate agribusiness on

almost every issue. “When meatpackers own livestock, they can manipulate prices and discriminate against independent farmers,” Obama said. In addition, he proposed to strengthen anti-monopoly laws and producer protections to ensure independent farmers have fair access to markets, control over their production decisions, and transparency.

“It is not clear to me what any of this rhetoric really means,” Sumner says, adding that inhibiting the manoeuvres of agricultural buyers can actually hurt producers and consumers more than regulate these packers and processors. “The problem is that raising costs for those who buy and process meat will lower the price of animals and raise the price of meat,” Sumner says.

Obama and biofuels

It’s been said that before the proliferation of biofuels the livestock industry had a buyer’s monopoly on grain. Of course now complaints have risen claiming tax incentives received by ethanol and biodiesel manufacturers give them a purchasing advantage in raw materials. Unfortunately, no relief in terms of scaling back the benefits for biofuels is likely to come under a Barack Obama presidency. “President-elect Obama has voted in favour of every biofuels subsidy and these have had severe problems for the livestock industry as well as for food prices and hunger among the poor outside the US,” Sumner says.

“Again, maybe as president he will reverse himself, but there is no evidence of such a new position.” While the biofuels and livestock industries compete for grain, different regions of the US compete for federal subsidies. Historically, fruits, vegetables and other crops grown mostly in coastal areas have received much less support than feedstuffs grown in the Corn Belt. That is a situation, however, that is changing, Pomeroy says. “There’s a great opportunity for diversifying in light of the construction of this Farm Bill,” he says. “Specialty crops are provided for now, so the next secretary of agriculture will have legislation that helps him with that mission.”

Most of the produce grown in California is fruits and vegetables, not the endless corn and soybean fields of the factory farms of the Mid-West, which usually get most of the federal support. Disgruntled, Sumner says grain is the only crop sector formidably subsidised by the commodity payments programme. “The last Farm Bill provided about $10 billion-per-year for the programme crops (corn, soybeans and wheat) grown in North Dakota and about $300 million-per-year max for the 30% of agriculture that people in North Dakota call ‘specialty crops’ and we just call ‘crops’ – so yes it went up from about zero to just a little.” Sumner certainly disagrees with Pomeroy and his response to the Congressman’s comments shows the disparity and conflicts which arise in agricultural politics in a country whose regions are so diverse. “President Obama and the majority will be in a position to pass what they want – but there are regional differences – so that the majority may not know what it wants,” Sumner says.

Obama and agricultural trade

Imposing tighter regulations in the financial sector keeps with the tendencies and tenets of the Democratic Party philosophy, as does increased scepticism in trade deals. This could worry the livestock industry. Scott Tapper, a producer and former president of the Iowa Pork Producers Association tells that there are hopes that Obama will be as aggressive in negotiating trade deals as Bush, whose work with Korea and Brazil especially won the praise of an industry now exporting about 20% of its product. “Obama has always voted against trade,” Sumner says. “He has never found a real trade agreement he could support and campaigned against Nafta (North American Free Trade Agreement, ed.).”

“We’re not going to see any reactionary anti-trade legislation,” Pomeroy says. “There will be rigorous evaluation of trade agreements on the basis of clear benefits for the US. I certainly don’t think we will see any more of a free trade at any cost philosophy. President Obama will not operate on the assumption that new trade is good trade no matter what. There will be a healthy scepticism as deals are put together.”

In the end there can only be speculation about the policies of a president who has just taken office, but there probably won’t be major changes to American farm policy for the first term of the Obama administration anyway. “It’s a five-year bill so there’s not much likelihood that it would be opened by 2013,” Pomeroy says. “Right now there are bigger fish to fry.”|

Big farm supporter as secretary of agriculture

Barack Obama has nominated former Iowa governor Tom Vilsack (58) to be the next secretary of agriculture, adding a former rival to his administration. Vilsack was not an ideal choice for advocates of sustainable agriculture, who had hoped Obama would choose someone less connected to powerful agribusiness interests (Iowa’s economy is dominated by huge corn and pig farms). But Vilsack has shown an ability to think independently and some critics are hoping his credibility with Big Agriculture could help him bring about radical changes in the Department of Agriculture without looking too far out of step with the mainstream. Vilsack has been a strong supporter of biotechnology.

He was named Governor of the Year in 2001 by the Biotechnology Industry Organisation. He has been a proponent of subsidies for corn growers who produce ethanol, as well as wind-generated energy and farm-conservation programmes. He is also in favour of working hard to stop global warming; one of the main reasons Obama selected him as secretary. With Vilsack as agriculture secretary, Iowans will arguably have more influence over US farm policy than ever before — the Senate Agriculture Committee chairman is Tom Harkin, of Iowa.